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Bank of Thailand Takes Measures to Reign in Thai Baht

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BANGKOK – The Bank of Thailand has stepped up its efforts to curb short-term speculative inflows by lowering the cap on the outstanding balance of a non-resident accounts from 300 million baht per person to 200 million baht, effective from July 22.

The Bank of Thailand is also tightening the reporting requirements for non-residents holdings of debt securities issued in Thailand.

The names of end beneficiaries shall be reported for all non-residents holdings of Thai debt securities.

The measure, effective from this month, will help enhance the central bank’s surveillance of non-residents investment activity, Ms Vachira said.

Monitoring the Soaring Thai Baht

“The Bank of Thailand will continue to closely monitor the Thai Baht’s movements, as well as non-resident behavior, and stand ready to use additional measures if undesirable speculative behavior persists,” she said.

The baht is Asia’s best-performing currency, up 5-6% against the US dollar this year.

The private sector has demanded the central bank rein in the Thai baht after the local currency recently hit a six-year high.

The baht slipped by 20 basis points to 30.91 per dollar after the announcement, and traded at 30.87 at 12.10pm.

The stock market dropped about 0.5% at the midday break, but is up by 11% this year.

Dealers said the measures would have a short-term impact on inflows, which they expected to slow down. Some traders suggested the central bank should cut its policy rate.

The central bank has left its benchmark interest rate unchanged at 1.75% since December’s hike. The rate is 50 basis points above the record low.

“What the central bank should do is to cut its policy interest rate,” said a dealer at Krung Thai Bank.

Central bank governor Veerathai Santiprabhob said on Monday there was no need for a quick adjustment of monetary policy.

Friday’s measures came after the regulator this month cut its short-term bond supplies to slow fund inflows, which had pushed up the baht to its highest in six years this month.

Source: Bangkok Post

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